The Department of the Treasury and the Internal Revenue Service released new guidance that is “designed to expand the use of income annuities in 401(k) plans.”
COLUMBUS, Ohio, June 18 -- The Ohio Department of Insurance issued the following news release:
Governor Kasich signed into law legislation allowing Ohio businesses to form captive insurance companies in the state to provide for their own commercial insurance needs, Lieutenant Governor and Department of Insurance Director Mary Taylor announced. House Bill 117 provides the Department of Insurance with regulatory authority over captives.
Ohio now joins more than 30 states that allow the formation of captives.
"Thanks to the work and leadership of Chairman Hackett and Rep. Stinziano in conjunction with many different stakeholder partners, this legislation will further strengthen Ohio's insurance market," Taylor said. "These new tools will offer Ohio businesses new opportunities while also ensuring the Department has the proper and appropriate oversight in place."
The legislation allows the formation of captives to meet the commercial insurance needs of businesses such as for commercial auto liability, workers' compensation and medical malpractice. The legislation does not permit captives to be used to insure personal lines of insurance.
HB 117 also sets forth certain capital and financial reserve, organizational, general application and fee requirements and gives the Department authority to monitor the relationship/transaction between a parent business and its Ohio formed captive(s) instead of relying exclusively on another state's regulator. These measures will provide the Department with the regulatory tools necessary to monitor and regulate captives operating in Ohio.
A captive is different from a commercial insurance company because it only serves its parent business. Therefore, captives are regulated differently than traditional insurance companies that serve the public. Like traditional insurance companies, captives are regulated by the state in which its headquarters are located.
Captives have become a popular risk-management tool for businesses seeking greater control over managing their commercial insurance needs.